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We read every proxy statement for the airlines we cover. We examine pay drivers for each CEO and how they changed over the last two years. We also examine insider ownership and pay mix. For reference, we show how pay drivers at each airline have evolved since 2007.

Scheduled system seat capacity for the May-Aug four-month period shows seat growth of -45.1% y/y, down 1.7pp w/w. Domestic growth was down 1.3pp w/w to -42.1% y/y. Pacific capacity was down 3.6pp w/w to -65.7% y/y, transatlantic was down 2.0pp w/w to -79.2% y/y, and Latin was down 5.8pp w/w to -60.0% y/y. Int’l growth was down 4.5pp w/w to -66.1% y/y. Domestic competitive capacity was down 1.6pp w/w to -45.4% y/y.

It’s time. We upgrade airlines from Market Underweight to Market Weight. While the industry outlook is still scary, signs of life are undeniable. Let’s be clear: we fear a 2H20 pricing implosion, putting us on the wrong side of a W- shaped recovery. But we believe the worst is behind us. And while demand for air travel probably won’t recover concurrent with demand for other things, we believe the primary debate on that gap is timing-related. But after the recent pop in the stocks, we expect greater relative dispersion within the sector.

Scheduled system seat capacity for the May-Aug four-month period shows seat growth of -43.4% y/y, down 3.4pp w/w. Domestic growth was down 3.4pp w/w to -40.8% y/y. Pacific capacity was down 2.7pp w/w to -62.1% y/y, transatlantic was down 4.6pp w/w to -77.2% y/y, and Latin was down 3.3pp w/w to -54.1% y/y. Int’l growth was down 3.6pp w/w to -61.6% y/y. Domestic competitive capacity was down 3.5pp w/w to -43.8% y/y.

This week we co-hosted our 13th annual GTIC, in a virtual format. We had strong attendance (client registrations up ~80% y/y) and huge interest in airlines and related issues. Many thanks to the companies and industry leaders who took the time to join us! This is a detailed summary of it.

Scheduled system seat capacity for the May-Aug four-month period shows seat growth of -40.0% y/y, down 1.5pp w/w. Domestic growth was down 1.4pp w/w to -37.4% y/y. Pacific capacity was down 93bp w/w to -59.3% y/y largely on HA’s cut, transatlantic was down 2.0pp w/w to -72.6% y/y, and Latin was down 3.0pp w/w to -50.8% y/y. Int’l growth was down 2.5pp w/w to -58.0% y/y. Domestic competitive capacity was down 1.7pp w/w to -40.3% y/y.

13 airlines, (both U.S. and international, public and private), policy experts, and labor leaders will be presenting at our 13th annual Wolfe Global Transportation and Industrials Conference (GTIC) next week. We appreciate them doing it during such a terrible time for the industry. We will be moderating panels and fireside chats all day on Tuesday, 5/19. It is a very good lineup.

ALGT reported 1Q20 GAAP net income of -$33M relative to our estimate of -$8M. Like many other low cost airlines, ALGT noted strong liquidity, near-term cost savings actions, a slowly improving cash burn rate through YE20, and an ability to be opportunistic with growth on the other side of Covid-19. Like many of us, airlines are increasingly sounding like coiled springs as they see signs of life in booking activity. But ALGT sounds particularly anxious to get back out there, noting the likely availability of used planes and engines as competitors go away. But in the meantime, ALGT is trimming costs by retiring 25 planes (~28% of its active fleet), with “up to half” likely put down for good.

Scheduled system seat capacity for the May-Aug four-month period shows seat growth of -38.5% y/y, down 7.9pp w/w. Domestic growth was down 8.6pp w/w to -36.1% y/y. Pacific capacity was down 4.5pp w/w to -58.4% y/y largely on DAL’s cut, transatlantic was flat w/w at -70.6% y/y, and Latin was down 3.8pp w/w to -47.8% y/y. Int’l growth was down 2.8pp w/w to -55.5% y/y. Domestic competitive capacity was down 8.7pp w/w to -38.5% y/y.

Cash burn is a common metric that each airline defines differently. So we standardize it across our coverage. We made a spreadsheet that shows monthly cash burn rates by airline through YE20 using updated P&L assumptions, and it shows when each airline runs out of existing cash on hand. We define cash burn as cash revenue minus cash operating costs, cash refunds, debt principal & interest payments, and capex. We hold constant smaller working capital inputs, but we assume a non-linear decline in cash refunds as the year progresses.